Thursday, March 18, 2010

Liars still at the poker table

I'm reading for a paper semi-related to the current financial crisis, and the first book on my list is Michael Lewis's new release, "The Big Short." Here's a bit of the prologue, where M.L. talks about writing "Liar's Poker."

Up to that point, just about everything written about Wall Street had been about the stock market. The stock market had been, from the very beginning, where most of Wall Street lived. My book was mainly about the bond market, because Wall Street was now making even bigger money packaging and selling and shuffling around America's growing debts. This, too, I assumed was unsustainable.

I thought that I was writing a period piece about the 1980s in America, when a great nation lost its financial mind. I expected readers of the future would be appalled that, back in 1996, the CEO of Salomon Brothers, John Gutfreund, was paid $3.1 million as he ran the business into the ground. I expected them to gape in wonder at the story of Howie Rubin, the Salomon mortgage bond trader, who had moved to Merrill Lynch and promptly lost $250 million. I expected them to be shocked that, once upon a time on Wall Street, the CEOs had only the vaguest idea of the complicated risks their bond traders were running.

And that's pretty much how I imagined it; what I never imagined is that the future reader might look back on any of this, or on my own peculiar experience, and say, "How quaint." How innocent.